Merrill Lynch, the giant American fund manager, believes that alternative energy sources are about to become a viable everyday reality. Now it is inviting adventurous technology investors to buy shares in its new fund.

The Merrill Lynch New Energy Technology Trust, which invests in companies producing renewable sources of energy, aims to take advantage of what the fund manager sees as a fast-growing industry. Companies producing everything from wind turbines to fuel cells for cars, and those providing software or components to alternative energy companies, are of interest to the trust.

Graham Birch, head of natural resources at Merrill Lynch, said: "This is a high-growth business. The total demand for energy will grow in line with global gross domestic product. This extra energy is not likely to be provided by coal. This is a driver behind the alternative energy market."

Another "driver" or motivation, he added, is the agreement of 160 countries to address greenhouse gas emissions under the Kyoto Protocol, reached in Japan in 1997. Some American states, including California, New York, Massachusetts and Maine, have also introduced regulations requiring 10 per cent of all vehicles sold to have zero emissions by 2003.

Much of the green energy technology has existed for some time without achieving mass appeal. Wind farms have been controversial, attracting some criticism for being noisy. Merrill Lynch, however, is convinced that its time has come.

Mr Birch said: "Fuel cells have become more mainstream, and are coming down in price. As for the performance issue, the power depends on how big a fuel cell you have. It is the same as having a 1,000cc or a 3,000cc engine. Daimler-Chrysler is due to launch a fuel cell-powered car in 2004.

"The size of the new generations of wind turbines is astonishing - the blades are up to 40 metres long. But there is a trend towards putting them in more remote locations. Eventually, they will probably be about five miles offshore.

"You certainly don't want them close to residential areas. But a traditional power station is ugly. I don't think wind power is disadvantaged in terms of its visual impact."

The trust will invest in alternative energy companies worldwide, and can have up to 25 per cent of its holdings in unlisted companies, which may increase the investment risk. There are approximately 300 companies in the alternative energy sector, with 90 quoted. Another 10 companies are expected to come to the market in the next 12 months, said Merrill Lynch.

The new trust is open for subscriptions until October 17. It will have an initial fee of three per cent, and an annual management fee of one per cent a year, with the possibility of a performance-related fee on top if the manager outperforms a benchmark. This extra fee is capped at 1.5 per cent of net assets.

Kim North, consultant at independent financial adviser Calkin Pattinson, was keen on the trust, predicting that it would make good returns over the longer term. She said: "This is suitable for people who are high-risk investors. It is going to be a very volatile investment.

"It is not necessarily a short-term hold - you should be looking at three years plus. But I would happily recommend it to the right sort of investor."